Dollar falls from 3-week high versus euro amid Fed speculation

The dollar fell from a three-week high versus the euro after data showed the U.S. unemployment rate was higher than forecast in December, fueling bets the Federal Reserve won’t end its stimulus efforts any time soon.

The euro rose earlier after minutes of the Fed’s last meeting showed yesterday the central bank might end its third round of monthly bond purchases under quantitative easing this year. The greenback climbed to the highest against the yen since July 2010 as the Japanese currency headed for its longest weekly losing streak in almost 24 years. Brazil’s real and Mexico’s peso gained versus their major peers as risk appetite rose.

“I looked at the unemployment report, and I didn’t see any improvement,” Joseph Trevisani, chief market strategist at WorldWideMarkets Ltd. in Woodcliff Lake, New Jersey, said in a telephone interview. “Nobody one thinks their policy is going to end any time soon.”

The U.S. currency slipped 0.2 percent to $1.3073 per euro at 2:58 p.m. New York time. It appreciated earlier to $1.2998, the strongest level since Dec. 12. The dollar has strengthened 1.1 percent on the week. The U.S. currency gained 1 percent to 88.12 yen and touched 88.41, a 29-month high. The yen slid 1.2 percent to 115.19 per euro.

The Dollar Index, which Intercontinental Exchange Inc. uses to track the U.S. currency, rose 0.1 percent to 80.592 after gaining as much as 0.6 percent.

The U.S. unemployment rate was 7.8 percent after the November figure was revised to that level from a previously reported 7.7 percent. The median forecast for December of economists in a Bloomberg News survey was for 7.7 percent.

‘Dollar-Negative’

“Looking at the unemployment rate, the weakness in that number is clearly dollar-negative because of the Fed’s comments on QE3 and the market’s expectations around how long that will last,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in a telephone interview.

The Mexican peso and Brazil’s real were the biggest winners today among the greenback’s 16 most-traded counterparts.

The peso appreciated 0.4 percent to 12.7524 per dollar after earlier falling as much as 0.2 percent. The real strengthened 0.6 percent to 2.0337 per dollar after the FIPE consumer price index increased more than forecast in a Bloomberg survey of economists. The gauge rose 0.3 percent to 2.0387 per dollar, the Foundation Economics Research Institute reported.

New Zealand’s dollar gained 0.3 percent to 83.06 U.S. cents after falling 0.8 percent earlier. The Canadian dollar appreciated 0.1 percent to 98.67 cents to the greenback after government data showed the unemployment rate unexpectedly declined to a four-year low of 7.1 percent.